There are less than two months left before the Task Force on Alcohol Pricing and Addiction Services must submit recommendations to Oregon Gov. Tina Kotek concerning ways the state can work to curb substance abuse, which may include tax increases on alcohol.
The task force, consisting of 16 voting members, was created through House Bill 3610 in the 2023 legislative session to study alcohol addiction and prevention, Oregon’s distribution of resources for treatment, existing funding for programs, the “cost of alcohol addiction to the state,” and the “benefits and drawbacks of imposing taxes on beer and wine.”
The task force is chaired by Rep. Tawna Sanchez, who has been vocal in her desire to increase bev-alc taxes, including proposing a +3,000% increase for beer, from $2.60 per barrel to $72.60 per barrel, in 2021 (H.B. 3296), and a +1,200% increase, to $33.60 per barrel, proposed in 2023 (H.B. 3312).
However, those attempts were allegedly meant to raise alarm bells and motivate the alcohol industry to “come to the table,” Sanchez said in a May task force meeting, following a presentation from task force member and 2 Towns Ciderhouse co-founder Aaron Sarnoff-Wood.
“Those two bills were never going to pass,” Sanchez said. “Part of the intention was to get the alcohol industry to come to the table and have a discussion … no one wanted to talk to me about it.”
Sarnoff-Wood discussed the previous proposals during his presentation calling them “extreme” and claiming they would “have been catastrophic to our industry” if passed.
Oregon Beer & Wine Distributors executive director Danelle Romain, also a task force member, added that the proposals themselves, even without passing, harmed the bev-alc industry.
“I don’t want to vilify you for those task bills … but what it did is it allowed other groups to say very negative things about the industry, it perpetuated a really negative dialogue in the media, in the legislature and it was really ugly,” Romain said during the May 16 meeting.
Ninkasi co-founder Jamie Floyd questioned Sanchez’s claims that the bev-alc industry has not wanted to participate in discussions around substance abuse and resources before.
“As a 25-year member of the Oregon Brewers Guild, I can tell you that we have never been invited to a single table, before a tax increase proposal or after,” Floyd said. “It doesn’t sound genuine to say we’ve never been or never want to be at the table – we’ve literally never been asked to be at a table. This is literally our first chance.”
An estimated 318 craft breweries operated in Oregon in 2023 – the 12th largest in the country – producing more than 895,000 barrels of beer, according to the Brewers Association (BA). Those breweries contributed nearly $2 billion in economic impact. The numbers do not include contributions from other beer-related industries, such as hard cider, for which Oregon is a primary market.
Task force members agree that more resources need to be allocated to substance abuse treatment and prevention in the state, but disagree on where funding should come from. Oregon received nearly $1 billion in funding for substance use disorder (SUD) services between 2021 and 2023 – $564.5 million from federal funds and $435.4 million from state funds – the Oregon Health Authority (OHA) shared in a May 28 presentation to the task force. The majority of that funding (65%) went to treatment services.
In several task force meetings, members have questioned if all allocated funding is being used as intended, including Sanchez acknowledging in one meeting that “the state does weird things with its money.” The OHA also admitted during its presentation that 7.4% of the organization’s budget between 2021 and 2023 – equivalent to $72 million – was unaccounted for.
Meanwhile, programs are still seeking money, claiming they are underfunded. The OHA estimated an additional $6.85 billion is needed to address “unmet needs,” including prevention programs, opioid treatment programs and outpatient facilities, worker salaries, training and certification, and more.
“It becomes very emotional and challenging for me when we’re getting flooded with calls of people that we cannot help,” Solara Salazar, a task force member and executive director of Cielo Treatment Center, an alcohol and drug rehabilitation center in Portland, said during the May 16 meeting.
“And we cannot get [them] into residential treatment, and we cannot get [them] into detox,” she continued. “And we’re always told, ‘We need more data, we need more studies.’ No, we need more beds, we need more funding.”
“I need to protect my people too,” Sarnoff-Wood responded. “And I want to make sure that we have a plan with where the money is going, and that it’s going to be used effectively.”
Additionally, tensions rose earlier this year after a 2021 OHA study on the impact of proposed higher beer and wine taxes was released to the public.
A report on the study, conducted by EcoNorthwest, examined the impact of excessive alcohol use on Oregon’s economy, as well as the economic impact of raising the state’s excise tax on beer and wine to $0.20 per standard serving, and counteracted some legislators claims that higher taxes would curb alcohol abuse.
The study found that increased taxes would result in a small decrease in heavy alcohol use, reducing the economic burden by up to $53 million (about 2% of the estimated annual costs). However, the state’s “heaviest drinkers” would only cut their consumption by an estimated 2%, with those consumers more likely to switch to less premium products instead of halting spending.
The controversy around the study is that the results of the tax-focused portion were not published on the OHA website, and have been absent from political discussions about proposed tax raises, The Oregonian reported. Tom Jeanne, OHA deputy state health officer, told the news outlet that the study would have been published under normal circumstances, were it not for a lack of staffing following the COVID-19 pandemic.
When the results of the study finally came to light in January, many members of the bev-alc industry expressed concern over the OHA’s legitimacy and alleged bias, claiming some legislators knew about the full findings of the study, but purposefully hid some of the results – with the help of the OHA – to avoid counteracting their claims that increased taxes would help with addiction issues.
OHA director Dr. Sejal Hathi joined a task force meeting in March to explain what the OHA was doing to correct its errors and how it plans to improve moving forward. Hathi was not at the OHA at the time of the study, taking the director position just over a year ago.
“I have questions about the process that was followed, and the circumstances surrounding the reports development, and untimely release,” Hathi told task force members. “And I am looking into that with my leadership team and with the staff to ensure that everyone is aware of my expectations around transparency, and, similarly, to determine whether we need a better policy as an agency to guide how reports are reviewed with whom they are shared, and on what basis on what timeline, rather, they are released.
“We won’t be able to function as an agency unless we are assured of the integrity of the information that we’re putting out there,” she continued.
The study returned to headlines in July with a Willamette Week report that a member of the Center for Disease Control (CDC) raised concerns around the study in 2022, because it used some data from Dr. Jon Nelson, a retired economics professor who previously published studies funded by the International Center for Alcohol Policies (ICAP), a non-profit founded by several bev-alc companies.
Those opposing the study’s findings claim the inclusion of citations from Nelson risk bias in favor of the bev-alc industry, while those in support of the study’s findings claim the study would have come to the same conclusions without the inclusion of Nelson’s studies. A spokesperson for the Oregon Beverage Association (OBA), a non-profit in support of the bev-alc industry, told Brewbound that Nelson was one of 57 citations in the study.
Oregon Legislative Revenue Office chief economist Mazen Malik backed the study’s conclusion in a presentation to the task force on July 18, noting that if taxes are used as a “policy tool, you’re not likely to curb significant use” of alcohol.
“Tax policy is probably not the best tool to use,” Malik said. “You’ll get some [curbed usage], but if that’s what you’re using, you’re using the wrong tool. You’re using a hammer to fish.”
After seven months of presentations and discussions, task force members were asked to submit suggestions and citations for the state’s next steps to Sanchez by July 25. The six members of the alcohol sector on the task force, including Romain, Floyd and Sarnoff Wood, as well Anheuser-Busch InBev general counsel Marcus Reed, Oregon Wine Council executive director Fawn Barrie and Oregon Winegrowers Association executive director Jana McKamey, submitted a joint recommendation.
“Alcohol taxes are a proven ineffective tool to control problem consumption, including excessive or teen drinking,” the group wrote. “If SUD funding is a priority, the Legislature should utilize more than the existing 3% of alcohol revenues to fund SUD programs.
“Knowing alcohol taxes do not curb problem consumption, the state should increase the use of existing tax and mark-up revenue beyond the current 3% to fund proven and vetted SUD programs,” they continued. “Alcohol taxes are the state’s third largest source of revenue. Less than 3% is earmarked for mental health and addiction. Reallocation of existing funds or earmarking any new OLCC [Oregon Liquor and Cannabis Commission] revenue to proven and vetted SUD programs would be a logical step forward.”
The representatives added that Oregon spends “more on addiction recovery and prevention than 75% of other states,” ranking No. 14 in spending, not including a “2021 $470 million behavior health package, Measure 110’s $300 million, $330 million from the opioid lawsuit settlement and the 2024 legislative investment of $211 million for housing, mental health and addiction services.”
“That’s more than $1 billion in new funding in the past few years,” the group wrote. “OHA’s request for $7 billion more dollars would mean Oregon would spend nearly 10-times more than any other state per capita.
“We need to work together to ensure resources are deployed in a coordinated fashion on evidence-based treatments with accountability over OHA and providers,” the group continued. “Oregon’s beverage sector cares deeply about our community, which is why we invest and create jobs in Oregon. And for this reason, we ask that you hold OHA accountable for the information they are providing to you and to the public. We’d welcome the opportunity to discuss this information with you to ensure lawmakers and the public have a full and accurate picture of addiction in Oregon so that we can make informed decisions.”
The OBA also wrote a letter to Gov. Kotek and Oregon legislators in June, asking for a reassessment of the OHA’s role and responsibilities.
“The Oregon Health Authority (OHA) continues to provide misleading data to the public, media and lawmakers which shapes Oregon’s addiction narrative,” OBA wrote. “OHA does not know whether money spent on behavioral health has made a difference because OHA does not track the money after it is spent or hold providers accountable, but they are not shy about asking for billions more. Unfortunately, mismanagement of funds is only one of OHA’s major missteps in the behavioral health space. OHA must be held accountable for the misinformation it shares.
“We need to work together to ensure resources are deployed in a coordinated fashion on evidence-based treatments with accountability over OHA and providers,” OBA continued. “Oregon’s beverage sector cares deeply about our community, which is why we invest and create jobs in Oregon. And for this reason, we ask that you hold OHA accountable for the information they are providing to you and to the public.”
The task force’s report on findings and next steps is due to the governor by September 15. Task force members will vote on recommendations sometime in the next month.
This story was updated on August 12 at 9:47 a.m. ET with the correction that there at 16 voting members on the task force. Previous copy had 11 voting members. We apologize for the error.